Calculate the rate of return of the portfolio

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Reference no: EM13199699

Roger has just been hired as chief portfolio officer of Bear United Capital.As part of this new position, he has been asked to assemble a model portfolio from a set of assets.The assets in the model portfolio include the following:


Weight

Expected Return

Actual Return

Stock A

0.2

0.05

0.09

Stock B

0.1

0.07

0.04

Stock C

0.25

0.12

0.14

Stock D

0.05

0.02

0.04

Stock E

0.1

0.04

0.01

Stock F

0.3

0.35

-0.02


Using the above assets from the model portfolio and their associated values, calculate the following:

  • The rate of return of the portfolio
  • The expected rate of return on the portfolio
  • Discuss your perception of the two returns and what is driving each in detail
  • Which return is a better measure of return on a portfolio, and when shouldyou use each?

Reference no: EM13199699

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